IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA No.6698/Del/2016 Assessment Year : 2005-06 Jindal Steel & Power Ltd., Jindal Centre, 12, Bhikaji Cama Place, Delhi. Vs. DCIT, Circle- 1(1), Gurgaon. PAN : AAACJ7097D (Appellant) (Respondent) Assessee by : Shri Ajay Vohra, Sr. Adv. Shri Rohit Jain, Adv. Shri Deepesh Jain, CA Department by : Shri Vijay Verma, CIT-DR Date of hearing : 16-05-2018 Date of pronouncement : 08-06-2018 O R D E R PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 01.12.2016 of the CIT(A)- 1, Gurgaon relating to assessment year 2005-06. 2. Facts of the case, in brief, are that the original return of income in this was filed by the assessee company on 31.10.2005 declaring total income of Rs.1,46,94,07,460/-. The assessee company is engaged in generation of power and manufacturing of sponge iron & other steel products etc. The said return was processed on 24.02.2006. Later a revised return was filed on 30.03.2007 reducing the income originally returned to Rs.92,06,88,890/-. The assessment
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IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, …€¦ · Shri Rohit Jain, Adv. Shri Deepesh Jain, CA Department by : Shri Vijay Verma, CIT-DR Date of hearing : 16-05-2018
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IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “D”, NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
AND
SMT. BEENA A. PILLAI, JUDICIAL MEMBER
ITA No.6698/Del/2016
Assessment Year : 2005-06
Jindal Steel & Power Ltd.,
Jindal Centre,
12, Bhikaji Cama Place,
Delhi.
Vs.
DCIT, Circle- 1(1),
Gurgaon.
PAN : AAACJ7097D
(Appellant) (Respondent)
Assessee by : Shri Ajay Vohra, Sr. Adv.
Shri Rohit Jain, Adv.
Shri Deepesh Jain, CA
Department by : Shri Vijay Verma, CIT-DR
Date of hearing : 16-05-2018
Date of pronouncement : 08-06-2018
O R D E R
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated
01.12.2016 of the CIT(A)- 1, Gurgaon relating to assessment year 2005-06.
2. Facts of the case, in brief, are that the original return of income in this
was filed by the assessee company on 31.10.2005 declaring total income of
Rs.1,46,94,07,460/-. The assessee company is engaged in generation of power
and manufacturing of sponge iron & other steel products etc. The said return
was processed on 24.02.2006. Later a revised return was filed on 30.03.2007
reducing the income originally returned to Rs.92,06,88,890/-. The assessment
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was completed u/s 143(3) on 31.12.2007 determining the total income of
Rs.2,12,42,01,723/- making the various additions. Subsequently, the Assessing
Officer reopened the assessment u/s 147 of the I.T. Act, 1961 by recording the
following reasons :-
“Reasons U/s 147 of the Income Tax Act, 1961 :
On completion of scrutiny assessment proceedings U/s 143(3) of the Act vide
order dated 31.12.2007, returned income of Rs.1,46,94,07,460/- was enhanced by the
AO to Rs.2,12,42,01,723/- making certain additions. Subsequently, it has been
noticed that deduction under Section 80IB of the Act has been allowed in this case at
Rs.41,20,57,046/-; being 100% of the income/profits of the Mini Blast Furnace Unit
of the assessee. It has further transpired that accumulated losses upto the A/Y 2004-
05 amounting to Rs.8,53,95,939/-, were required to be reduced for working-out
allowable deduction U/s 80IB from the income of this Unit in view of the provisions of
Section 80IB(13) read with Section 80IA(5) of the Act, but the same have not been
reduced resulting into excess allowance of deduction U/s 80IB of the Act to this
extent. Hence, the assessee has not disclosed fully & truly all material facts
necessary for its assessment for the year under consideration.
Therefore, I have reasons to believe that income chargeable to tax amounting
to Rs.8,83,95,939/- has escaped assessment for the A/Y 2005-06.”
3. Before the ld. CIT(A), the assessee challenged the validity of the re-
assessment proceedings as well as the various additions made by the Assessing
Officer on merit. Ld. CIT(A) noted that the assessment order against which the
appeal has been filed before him has already been set-aside by the then the ld.
CIT, Hisar by his order dated 27.03.2015 passed u/s 263 of the I.T. Act and the
Assessing Officer has been directed to pass a fresh order. He, therefore,
confronted the assessee to explain as to why the appeal filed by the assessee
should not be dismissed being infructuous. The assessee made elaborate
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submissions regarding the maintainability of the appeal. The assessee also
challenged the validity of the re-assessment proceedings.
3.1 However, ld. CIT(A) dismissed the appeal filed by the assessee by
observing as under :-
“3.2 I have carefully considered the appellant’s submissions. It is an undisputed
fact on record that the order against which the present appeal has been filed has
already been set aside by the CIT, Hisar u/s 263 of the I.T. Act. The only addition
made in the order under appeal was addition u/s 80IB. This addition has been set
aside by the CIT, Hisar and no addition survives in the original order. It is also a fact
on record that the AO has already passed a fresh assessment order in accordance
with the direction given by the CIT, Hisar vide order u/s 263 of the IT Act.
3.3 In view of the aforesaid facts there is no addition or disallowance which can
be considered for adjudication at this stage. As such, the appeal filed by the
appellant has became in-fructuous and is accordingly dismissed. The appellant may
take any ground of appeal for the appeal which he may file against the fresh
assessment order passed by the AO in accordance with the direction given by CIT,
Hisar u/s 263 of the IT Act.
3.4 The appeal filed by the appellant is accordingly dismissed.”
4. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal
before the Tribunal by raising the following grounds :-
“1. That the Commissioner of Income Tax (Appeals) ['CIT(A)'] erred on facts and
in law in dismissing the appeal filed by the appellant against order dated 04.03.2013
passed under section 143(3)/147 of the Income-tax Act, 1961 ('the Act'), holding the
same to be infructuous.
1.1 That the CIT(A) erred on facts and in law in dismissing the appeal as
infructuous on the ground that the reassessment order dated 04.03.2013 passed under
section 147 was subsequently set aside by the CIT under section 263 on the issue of
computation of deduction under section 80IB of the Act.
1.2 That the CIT(A) erred on facts and in law in dismissing the appeal as
infructuous without adjudicating the grounds raised by the appellant challenging
assumption of jurisdiction and validity of reassessment order dated 04.03.2013
passed under section 143/147 of the Act.
1.3 That the CIT(A) failed to appreciate that validity of subsequent revisionary
order under section 263 of the Act was dependent upon the validity of reassessment
order challenged in appeal and consequently, the appeal filed was not rendered
infructuous merely on account of passing of subsequent revisionary order.
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1.4 That the CIT(A) further failed to appreciate that the reassessment order had
been set aside by the CIT under section 263 to the limited extent of examining issue
relating to deduction under sections 80IA/80IB of the Act and not in toto and
therefore, the appeal was not rendered infructuous.
2. That the CIT(A) erred on the facts and circumstances of the case and in law in
not holding the reassessment order dated 04.03.2013, passed by the assessing officer
under section 143(3)/147 of the Act to be beyond jurisdiction, barred by limitation,
bad in law and void ab initio.
2.1 That the CIT(A) erred on facts and circumstances of the case and in law in not
quashing reassessment order since the reassessment proceedings were completed
without following the mandatory procedure laid down by the Hon'ble Supreme Court
in the case of GKN Driveshafts (India) Ltd. vs. ITO: 259 ITR 19.
2.2 That the CIT(A) erred on facts and circumstances of the case and in law in not
holding reassessment order to be illegal and bad in law, being based on mere change
of opinion/reappraisal of existing material/information.
2.3 That the CIT(A) erred on facts and circumstances of the case and in law in not
holding that initiation of reassessment proceedings under section 147 of the Act was
barred by limitation prescribed in first proviso to that section.
2.4 That the CIT(A) erred on facts and circumstances of the case and in law in not
holding that reassessment order passed under section 147, in contravention of
provisions of sections 149 to 151 of the Act, was invalid and bad in law.
3. That the CIT(A) erred on facts and circumstances of the case and in law in not
holding that losses of Rs.8,83,95,939 pertaining to the unit eligible for deduction
under section 80IB of the Act for earlier years, which already stood set off against
profits for those years, were not required to be notionally brought forward and set off
while computing eligible profits of the year under consideration.
4. That the CIT(A) erred on facts and circumstances of the case and in law in not
deleting interest charged under section 2340 of the Act.
5. That the CIT(A) erred on facts and circumstances of the case and in law in not
reversing the action of the assessing officer in withdrawing interest under section
244A of the Act.
The appellant craves leave to add, alter, amend or vary the aforesaid grounds of
appeal at or before the time of hearing.”
5. In ground of appeal no.1 to 4, the assessee has challenged the order of ld.
CIT(A) in treating the appeal filed by the assessee before him as infructuous,
illegal and bad in law.
5.1 Ld. counsel for the assessee submitted that the original assessment was
completed u/s 143(3) on 31.12.2007 determining the total income at
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Rs.2,12,42,01,723/-. The notice u/s 148 was issued on 23.03.2012. The reasons
recorded show that the issue on which re-assessment proceeding has been
initiated is that loss of earlier assessment years of Mini Blast Furnace (MBF)
unit, qua which deduction u/s 80IB was claimed, which were adjusted against
taxable profits of earlier years, were required to be notionally carried forward
and set off/adjusted against the current year profits of that unit while computing
deduction u/s 80IB of the I.T. Act. He submitted that without disposing of the
preliminary legal objections of the assessee, the Assessing Officer proceeded to
pass the re-assessment order dated 04.03.2013 wherein he reduced eligible
deduction of MBF unit from 41.20 crores to 32.36 crores, after adjusting
notional loss of Rs.8.83 crores pertaining to earlier assessment years. He
submitted that during the pendency of the aforesaid appeal before the ld.
CIT(A), revisionary proceedings were initiated by the CIT vide show cause
notice dated 22.10.2013, which culminated into order dated 27.03.2015 passed
u/s 263 of the I.T. Act, whereby the CIT has set aside the reassessment order on
the limited issues of examination of deduction u/s 80IA/80IB of the I.T. Act.
The appeal against the said order passed u/s 263 is also pending before the
Tribunal. In the aforesaid appeal before the ld. CIT(A) against the reassessment
order dated 04.03.2013, the ld. CIT(A) vide impugned order dated 01.12.2013,
dismissed the appeal filed by the assessee challenging (a) validity of
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reassessment order dated 04.03.2016 on jurisdictional grounds; and (b)
disallowance of deduction on merits on the ground that the said appeal had
become infructuous as addition/disallowance made in the reassessment order
dated 04.03.2016 was set aside by the ld. CIT u/s 263 of the I.T. Act.
6. Referring to the order passed u/s 263 for the impugned assessment year,
ld. counsel for the assessee submitted that the reassessment order was set aside
by the CIT exercising revisionary jurisdiction under section 263 to the limited
extent of examining issues relating to deduction under sections 80lA/80IB of the
Act. In other words, the reassessment order dated 04.03.2013 under section 147
of the Act was not set aside by CIT in toto. Referring to various decisions, he
submitted that where the Commissioner in exercise of revisionary power under
section 263 of the Act sets aside the assessment, the assessment is not
completely effaced; only the issues set aside by the CIT in the order under
section 263 of the Act are to be adjudicated afresh by the assessing officer.
Therefore, the reassessment dated 04.03.2013 challenged in appeal before the
CIT(A) was not set aside in toto but only to the extent of re-examining the claim
of deduction under sections 80-IA / 80-1B as indicated in the order passed under
section 263 of the Act. Therefore, the impugned assessment order is not
completely effaced so as to result in the appeal being rendered infructuous, as
held/claimed by the CIT(A). For the above proposition, he relied on the
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decisions in the case of Express Newspaper (P.) Ltd. v. CIT reported in 255 ITR
137 (Mad.) and in the case of CIT v. HH Lekshmi Bai reported in 203 ITR 398
(Ker.).
7. The ld. counsel for the assessee submitted that while exercising
jurisdiction under section 263 of the Act, the CIT assumed that the reassessment
order dated 04.03.2013 was validly passed. In the appeal against the impugned
reassessment order, the primary issue raised, as stated above, was challenge to
the validity/ legality of proceedings under section 147 of the Act. In case the
appellant is to succeed in demonstrating that jurisdiction under section 147 of
the Act was not validly assumed, then, reassessment order would be quashed.
Consequently, the order under section 263 of the Act seeking to revise the (non-
existent) reassessment order would fail. Therefore, the validity of the order
under section 263 of the Act is dependent on the fate of the reassessment order
to be decided in appeal there against. To put it differently, the disposal of the
appeal against the reassessment order by the CIT(A) on the grounds raised
therein had material and significant bearing on the assumption of jurisdiction
under section 263 of the Act, which is subject of challenge before the Tribunal
(ITA No. 1462/Del/2016). In that view of the matter, the CIT(A) ought to have
disposed off the appeal of the assessee on merits much less dismiss the same as
infructuous.
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8. He submitted that the validity of the reassessment proceedings was not
the subject matter of consideration in the revisionary proceedings under section
263 of the Act, since the Commissioner proceeded on the premise that the
reassessment order was valid in law. For that reason, the same could not and
was not set aside by the CIT for fresh consideration. He submitted that the issue
regarding quantum of deduction under section 80IB is secondary to the
fundamental issue of legality/ validity of the impugned reassessment order. He
reiterated that if the reassessment order is set aside as null and void being
beyond jurisdiction, there would not be any scope of sustainability of
subsequent revisionary order under section 263 of the Act. The first step,
therefore, would be to examine the validity/ legality of the reassessment order
passed by the assessing officer. It will, thus, be appreciated that the
jurisdictional legal issue challenging the validity of reassessment proceedings
arise out of the impugned reassessment order and could have and had to be
examined by the CIT(A). Being so, it was of paramount importance to first
examine the issue of legality of the reassessment order in the appeal by the
CIT(A).
9. The ld. counsel for the assessee submitted that upholding the action of
CIT(A) in dismissing the appeal as infructuous would render the appellant
remediless insofar as the issue of validity of reassessment proceedings under
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ITA No.6698/Del/2016
section 147 of the Act is concerned. In the appeal against order passed by CIT
under section 263, the appellate authorities would not, it is submitted, consider
the issue of jurisdiction of the assessing officer in passing the impugned
reassessment order under section 147 of the Act. Therefore, the assessee would
be rendered remediless qua the jurisdictional issue raised in the present appeal
against the reassessment order, if the appeal is dismissed as infructuous.
10. Secondly, the legal issue regarding requirement of set off of losses on
notional basis while computing deduction allowable under section 80IB in
respect of MBF unit has neither been considered nor set aside by the CIT in
revisionary proceedings under section 263 of the Act. Being so, the said issue
also requires adjudication in the present appellate proceedings against the
reassessment order dated 4.3.2013 and would neither arise in appeal filed
against order under section 263 (before ITAT) nor in appeal against
consequential order under section 143(3)/263 of the Act. He submitted that any
cause of action is rendered infructuous if the very cause, leading to the
grievance, against which legal remedy is pursued, itself ceases to operate/ exist.
The legal remedy (appeal) cannot be regarded as infructuous when the cause
and the fundamental grievance of the assessee/ petitioner/ litigant continues to
survive. Referring to various decisions he submitted that it is quite fundamental
that no one can be rendered remediless. The fundamental of law is captured in
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the maxim' Ubi Jus Ibi Remedium' which means for every wrong, law provides
a remedy. Referring to the decision of the Hon'ble Supreme Court in the case of
Canon Steels (P) Limited V. Commissioner of Customs: (2007) 14 SCC 464, he
submitted that the Apex Court in the context of territorial jurisdiction of Court,
observed, "But no person should be left without remedy ..... ".
11. He submitted that the statutory provision of appeal under section 246A of
the Act is for the benefit of the assessee. So long as the grievance of the
appellant continues to subsist, the appeal cannot be regarded and, or dismissed
as infructuous, so as to render the appellant remediless. Referring to the
following decisions, he submitted that in the context of section 246/246A/249 of
the Act, it has been consistently held by the Courts that the right to appeal is a
valuable substantive right and unless expressly taken away or abandoned, it
cannot be held that the assessee has abandoned or lost such right by any
implication(s) :-
(i) Indian Aluminuin Co. Ltd. v. CIT: 162 ITR 788 (Cal.);
(ii) CIT v. Bengal Card Board Industries & Printers (P.) Ltd.: 176 ITR 196.